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Who Loves Bernanke More: Gold – GLD or Stocks – SPY?

Ben Bernanke’s mouth spurred stocks higher. But it also sent gold straight up.

While S&P 500 futures were up about 0.75% on the day, gold futures were up nearly three times that after gaining 2%.

Let’s look at how gold has fared against the S&P 500 this year. Here’s a chart of the popular gold ETF, GLD.

From the price chart alone, we see gold has struggled since peaking last September. We’ve seen a series of “lower lows” that created a wedge pattern. But just recently GLD broke out of this pattern, suggesting it has enough buyers to make a run higher.

I’m most interested in the bottom half of this chart. It’s an indicator that compares the performance of GLD vs. SPY. When the bars point up, it indicates GLD is performing better than SPY. When the bars are negative, SPY is outperforming.

Looking to the far right of the bottom chart, we see the relative strength bars are at a high level not reached since the very beginning of this year. Investors have clearly favored stocks over gold for most of the year. But that all changed leading up to Bernanke’s Jackson Hole speech.

It seems gold bugs got more excited than stock buyers in anticipation of an easing signal from Ben. As Rodney points out, Bernanke hasn’t delivered the goods (just yet)… but he does seem ready and willing to give us another round.

Watch for gold to beat out stocks in anticipation of another monetary injection, but don’t celebrate for long. Over time, gold will falter.

If you haven’t done so already read the Survive & Prosper issue on “Yammering Silence from Ben Bernanke in Jackson Hole, Wyoming.”

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.